Which of the following transactions and events results in an increase in liabilities and a decrease in net income? A. The accrual of wages expense at year-end. B. Collecting cash from a customer for services to be provided in the future. C. The accrual of revenue earned at year-end. D. Adjustment of the unearned revenue account for revenue earned during the period

Question

Elodie

Business

24 August, 19:16

Which of the following transactions and events results in an increase in liabilities and a decrease in net income? A. The accrual of wages expense at year-end. B. Collecting cash from a customer for services to be provided in the future. C. The accrual of revenue earned at year-end. D. Adjustment of the unearned revenue account for revenue earned during the period

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Angelique Parsons · Answer 1

A. The accrual of wages expense at year-end.

Explanation:

At the end of the year based on accrual accounting, wages incurred but not paid to workers has to be recognised.

So the wage expense is debited for the outstanding wages at end of the year. This results in a decrease in net income because an expense is recognised.

Wages payable is credited for the amount accrued. Wages payable is a liability account so this results in an increase in the firm's liability.